Family Office Insights: Key Considerations When Structuring a Private Fund That Invests in Litigation Funding

February 2024
Region: Global

Third-party funding of disputes has evolved across multiple jurisdictions into a new and dynamic asset class for investors in private markets.

Its relative novelty, for example in the UK, derives from the evolution of law that historically prevented third parties supporting litigation in which they had no connection as defendant or claimant (known as “maintenance”). A stronger form of maintenance is “champerty,” being maintenance with a view towards making profit. Changes to the law have enabled third parties to fund litigation, provided certain conditions are met and maintained.

Perhaps unsurprisingly, private funds, such as private equity and venture capital, offer a parallel model that can be applied to litigation funding; in this second article in our firm’s series examining the nature and detail of the opportunities that continue to develop around third-party financing and the increasing commercialization of disputes, we explore some of the considerations that arise when structuring a private fund that invests in litigation funding. Other funding models, such as via listed stock market corporations, are also viable but are outside the scope of this article.

Related Content